Opening your own cinema – what is the essence of a business idea?
The desire to have fun with good friends, family, or your significant other comes up all the time. The most popular way of entertainment is going to a movie theater with a noisy company. People are ready to pay for watching a movie on a big screen in excellent quality, which is why a business plan for a mini cinema is considered a relevant, promising idea.
It is important not only to find a room and purchase all the equipment, but you will also need to buy the rights to display licensed products. Also, before starting a business, you need to choose the type of future business – there are various options for how interesting it is to equip a cinema. Let’s take a closer look at the varieties and the step-by-step opening algorithm.
Not sure how to write a business plan that will appeal to investors? Here we have given a detailed development guide.
Relevance of a business idea
Small and medium businesses are developing rapidly in the world, ideas of entrepreneurship are constantly appearing or already existing areas are developing. The sphere of entertainment is considered one of the most promising because you can make money on new ideas, unique solutions, here you can not be afraid to experiment.
A large percentage of the population loves to watch a good movie, because a variety of genres, talented actors, and huge budgets capture, cause a feeling of genuine delight.
Opening a cinema is a step towards an interesting business, which can be supplemented with various services ( cafes , other entertainments, attractions), or you can open an unusual institution.
Pros and cons of the idea
Each new business has its own strengths and weaknesses, it is important to be able to use them correctly and develop the business, relying on the existing advantages. The main advantages of a business:
- Big profit.
- Possibility of continuous development.
- When opening in a small town, there is minimal competition.
Not without cons:
- Large start-up investments are required in the business.
- In large cities, there is a high level of competition.
- Long payback period.
- The likelihood of finding partners, investors or taking a loan for opening.
What kind of cinemas are there?
Before starting a business, you need to choose what kind of cinema will open. There are the following directions:
- Standard establishment.
- 3D cinema.
- Show in the open space – in the open air.
- Buying a franchise.
Let’s take a closer look at each type, after which it will be possible to understand what kind of institution can be equipped.
The simplest type of cinema, familiar to the population. It is a room with equipped rooms with seats, sofas and a large screen.
In practice, it is better to create more than one large hall, but to split it into 2-3 small ones, showing more films at the same time – so everyone will find something to watch. Usually built in a mall, renting a piece of the building. You can also build your own cinema from scratch, but then the amount of start-up investment will double.
In general, this is the same standard cinema, only in it there is an additional opportunity, such as watching films in 3D format. It is unprofitable to open the hall only with this direction.
The best thing is to purchase the necessary equipment in addition to the standard one and offer two options for watching films.
Open-air film screenings
This type has just begun to develop, so you can easily enter a niche and organize your own establishment. The main disadvantage is seasonality, it also depends on weather conditions. It is impossible to hold screenings in winter or in rainy weather.
The minus is easily covered by additional income from the sale of drinks, food, hookahs can be offered. The most frequent opening is in the park area, where visitors are offered comfortable bean bags. Of the equipment, the main costs will go to the purchase of a screen with protection and speakers.
A business with a quick payback and small start-up investments. Opening a cinema will not be difficult, you will need to rent a platform for the screen, the sound is usually broadcast to the client’s car. You also need to create a large parking lot with places so that the screen can be seen by all guests.
Opening of a cinema by franchise
Big, popular companies are reluctant to sell the rights to use their name. This is mainly due to the fear that the entrepreneur will not be able to keep the bar and will provide low-quality services.
If such cooperation is achieved, then we can say that the business will flourish – the famous cinema will attract customers, and there will also be constant support, assistance in staff training, in the rental of licensed films, and so on.
When deciding how to open your own cinema in a small town, the best option would be to opt for a mini business option. A large establishment will be more difficult to maintain, perhaps it will only bring losses.
Large cities are usually attracted to open franchise chains or build their own businesses on a large scale. This is directly related to the number of people willing to spend a certain amount per month on entertainment in the form of going to the cinema.
Drawing up a business plan and first preparing for the opening – analysis of the audience, and understanding what genres are popular, whether a cinema is needed in the city, how many people are willing to pay to watch a movie.
You can do the analysis after the opening and the first week of work. From the visits it will be possible to understand:
- What genres are relevant.
- How full the hall is for the premiere.
- How full the hall is after the premiere.
It is also necessary to understand what kind of audience the entrepreneur is counting on, because this will determine which films will be put on the market.
Target audience portrait
Before opening a cinema, you need to compose a description of the future target audience of the business. The portrait of the target audience is as follows:
- Age from 4 to 55 years old.
- The amount of income is medium and higher.
- Distance – 5-7 kilometers from where the cinema is located.
According to such criteria, you can select suitable paintings, as well as look for the most profitable place to open.
What competitive advantages can you use?
In any business, it is very important to find your own flavor and stand out from other establishments. Competitive advantages for a cinema can be:
- Create a discount system for regular visitors, issue cards with cumulative promotions.
- You can arrange certain hours when there will be a reduced price for tickets – for example, from 10 am to 1 pm for mothers with children or from 8 pm to 10 pm for students.
- To arrange screenings of old films, hits of past years, short films, anime – in this way attract a large audience.
- Monitor the equipment, the quality of the show.
- Arrange various contests, raffles for tickets on social networks.
- To create a stylish place with a unique interior, constantly work to improve the service.
How to advertise a cinema?
An advertising campaign in a big city should be actively pursued for the first 2-3 months, and after that, the budget allocated for PR can be cut. Before opening a cinema, you need to think over a marketing strategy, you can apply the following actions:
- Advertise the establishment in the media – on local TV, radio and newspaper.
- Use outdoor advertising.
- Promote the cinema on the Internet – social networks, create your own website.
After the establishment becomes famous, you can leave only the promotion on social networks and the site.
Opening a Movie Theater in a Small Town: Step by Step Plan
A phased business opening is as follows:
- Drawing up a business plan.
- Analysis, study of the relevance of the case.
- Business registration.
- Search for a place, repair work.
- Purchase and installation of equipment.
- Conducting an advertising campaign.
- Directly opening a cinema.
Let’s take a closer look at each stage of the business plan.
When dealing with such a thing as opening your own cinema from scratch, you must first register in the chosen form; a Limited Liability Company is suitable for such a business.
Documents for setting up an LLC:
- Papers on the establishment of LLC.
- LLC Charter.
- Passport, TIN of each founder.
- Receipt for payment of state duty – 4,000 rubles.
You will also need to provide a lease agreement for the premises, open a bank account, and indicate the OKVED codes:
It is necessary to obtain a work permit from Rospotrebnadzor, the fire service and the sanitary and epidemiological station and obtain a license to show films.
To create a cinema, you need to find a good room, at least 400 square meters, which will be divided into a technical room, a cafeteria, toilets for employees and customers, showrooms, and a cash desk.
A place for a cinema must be selected according to the following criteria:
- In the city center, located near a shopping center, supermarkets, square or park.
- Inside a shopping center, renting a floor.
- In a residential area, next to the market, a large concentration of shops and supermarkets.
- Close to bus stops, transport interchanges.
You need to choose a place responsibly, the future income of the institution will depend on it.
What equipment do you need?
For the full operation of the cinema, you will need to buy a standard set of equipment:
- Technique for continuous display.
- Acoustic system.
The more halls are opened, the more money will be required to purchase equipment. You will also need to equip the cinema halls with rows of armchairs and sofas.
It is worth buying high-quality, branded equipment with a manufacturer’s warranty and additional maintenance.
Where to get films for screening?
You can buy the rights to show certain films from companies that cooperate directly with overseas companies and provide cinemas with buyout rights.
In Russia, the reselling of film licenses is carried out by:
- Central Parnership.
- Karo film.
With these firms, you can conclude a contract for several months to purchase licensed works and show them in your cinema. You should take care of orders in advance, think over which films to show and apply for the purchase of copies.
How much does it cost to open a cinema: startup investments and regular spending
According to the average estimate, large investments are required to start a business. They include:
- Business registration – 10,000 rubles.
- Premises for rent for the first months – 400,000 rubles.
- Repair work, room design – 680,000-700,000 rubles.
- Purchase of furniture and equipment for a cinema – 1,000,000 rubles.
- Advertising campaign – 250-300,000 rubles.
- Other expenses – 100,000 rubles.
- Reserve – 100,000 rubles.
In total, to create a business, you will need to invest 2,610,000 rubles. If the construction of a building is planned, then it will be necessary to add another 4-6 million for the construction and arrangement of the building.
Also, do not forget about regular spending:
- The rent is 200,000 rubles per month.
- Utility bills – 20,000 rubles.
- The salary for the employees is 200,000 rubles.
- Advertising campaign – 40,000-50,000 rubles.
- Accounting services – 25,000 rubles.
- Additional expenses – 30,000 rubles.
In total, 525,000 rubles will be required every month.
Business income, payback
A business plan for how to open a cinema in a small city should contain approximate calculations of the future income and payback of the project. Most of the revenue comes from ticket sales, related merchandise, food, and pre-movie ads.
On average, a cinema makes a monthly profit of 1-1.5 million rubles, deducting regular expenses from them, you can get 475,000-975,000 rubles, you also need to subtract 45% of the profit that goes for the rental of films.
As a result, the net profit per month is 250,000-300,000 rubles per month, which means that the project will be recouped after 4-5 years of stable operation.
What are the risks in business?
The most common and biggest risk in such a business is a lack of demand and customers, which leads to a loss of profits, a decrease in return on investment, or even the closure of the business. At the same time, taking into account the regular costs, without the proper revenue, the business will start working in the red and can go bankrupt in 3-4 months.
To avoid such a development of events, it is necessary to choose a place where to open a business, it is also important to select high-quality films and constantly develop the service so that customers do not have a reason to go to competitors.
An entrepreneur who is thinking about how to open a cinema must understand what kind of start-up investments are ahead of him, how long the project will pay off. The development of the business must be approached creatively, thinking of how to improve the service, the interior, and make viewing the picture a pleasure for the client. It is also important to develop a business plan, assess the relevance and analyze the market, because if at these stages the results are negative, then you should forget about the idea and start a business in another industry.